On Wednesday, January 14, 2015, the Obama administration announced plans to propose new regulations to reduce methane emissions from the oil and gas sector. The new rules will set standards for methane and volatile organic compounds (VOC) emissions from new and modified oil and gas production sources (under section 111(b) of the Clean Air Act), and natural gas process and transmission sources. While EPA previously issued a 2012 rule regulating VOCs, the agency stated that new and modified sources were not covered in this rule. EPA also announced plans to extend the VOC requirements to existing sources in nonattainment areas and in the ozone transport region by issuing Control Technique Guidelines.
The new methane rules add to a litany of rules issued and proposed by the Obama administration aimed at reducing greenhouse gas emissions from various sectors of the economy. During Obama’s presidency, his administration has issued rules to regulate emissions of carbon dioxide from cars and trucks along with proposed regulations on carbon dioxide from power plants. Many in the oil and gas industry, however, are concerned that this proposed methane regulation is redundant, costly, and unnecessary.
The proposed regulation will be designed to curb methane leaks from oil and gas wells, pipelines and valves. Obama’s administration stated that the regulations are intended to reduce methane emissions from the oil and gas sector by up to 45 percent from 2012 levels by 2025. Methane, a primary component of natural gas, is over 20 times more potent than carbon dioxide. Methane is also a valuable commodity sold by the oil and gas companies. As such, those in the industry have pointed out that the companies are already motivated to prevent leaks of methane so it can be brought to the market and sold. For now, the stringency and costs of the rules are unknown until the proposed rules are released. EPA plans to release a proposed rule in the summer of 2015 and the final rule in 2016.
This article was authored by Matthew S. Tyree, Jackson Kelly PLLC. For more information on the author, see here.